StanCorp Financial Group Inc
) is set to report fourth quarter and full year 2012 results on
Jan 28. In the prior quarter it posted a 52.5% positive surprise.
Let's see how things are shaping up for this announcement.
Factors this Past Quarter
Headwinds from the lack of employment and wage growth in group
insurance business will likely pressurize premium growth at Group
insurance. StanCorp also suffered a few rating and outlook
downgrades. Further, StanCorp Financial expects full year benefit
ratio to exceed its guided range of 80-82%, given its performance
in the first half of the year and the persistently low interest
rate environment. However, shares bought back under the 3 million
shares buyback program is expected to aid the bottom line, though
the company does not expect to buy back shares in the second half
of 2012 given the higher group insurance benefit ratio
experienced in the first half of 2012.
Our proven model does not conclusively show that StanCorp
Financial is likely to beat earnings this quarter. This is
because a stock needs to have both a positive Earnings ESP(Read:
Zacks Earnings ESP: A Better Method
) and a Zacks Rank of #1, 2 or 3 for this to happen. This is not
the case here as you will see below.
Negative Zacks ESP: This is because the most accurate
estimate stands at 80 cents while the Zacks Consensus Estimate is
higher at 83 cents. This comes to a difference of -3.6%.
Zacks Rank #2 (Buy): StanCorp Financial's Zacks Rank #2 (Buy)
lowers the predictive power of ESP because the Zacks #2 Rank when
combined with a negative ESP makes surprise prediction difficult.
We caution against stocks with Zacks rank #4 and #5 (Sell rated
stocks) going into the earnings announcement, especially when the
company is witnessing negative estimate revisions momentum.
Other Stocks to Consider
Here are some other companies you may want to consider as our
model shows they have the right combination of elements to post
an earnings beat this quarter:
Genworth Financial Inc.
), Earnings ESP of +16.0% and Zacks Rank #2 (Buy)
Manulife Financial Corporation
), Earnings ESP of +3.1% and Zacks Rank #2 (Buy)
), Earnings ESP of +66.7% and Zacks Rank #3 (Hold)
CITIZENS INC A (CIA): Free Stock Analysis
GENWORTH FINL (GNW): Free Stock Analysis
MANULIFE FINL (MFC): Free Stock Analysis
STANCORP FNL CP (SFG): Free Stock Analysis
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